Tax efficiency

src: financinglife.org

A financial process is said to be tax efficient if it is taxed at a lower rate than an alternative financial process that achieves the same end.

Passing one's assets onto one's heirs using a Grantor Retained Annuity Trust, for example, is potentially more tax efficient than simply letting the heirs inherit the assets directly.

Another example: An exchange-traded fund (ETF) that follows the S&P 500 Index generates fewer "taxable events" than a mutual fund that follows the same index.

Video Tax efficiency

References

Source of the article : Wikipedia